Understanding Box 1 of the 1098T

Many students and their family members are confused by amount shown in Box 1 of Form 1098T, as it may be less than the amount they have actually paid to North Central College.

Here are a few basics to keep in mind:

• Calculations take into consideration the date on which charges and payments are posted in the Merlin/Self-Service and use this date to determine the tax year. You can see the date of your transactions under Student Finance section on Merlin/Self-Service.
• While most of the charges on a student account are classified as Qualified Tuition and Related Expenses (QTRE), some are not. Per IRS Form 8863 Instructions, qualified education expenses do not include personal expenses such as room and board, insurance, medical expenses, transportation, or similar personal, living or family expenses.
• The title in Box 1 on form 1098T is “Payments received for qualified tuition and related expenses.” Because payments you make to North Central College may be applied toward both QTRE and non- QTRE charges, the amount in Box 1 may be less than your total payments.
• North Central College attempts to bill Spring charges in December of each year. Payment is due the first business day of January. You may choose to make your payment in December or January, but this decision impacts the tax year in which the payment will be recorded.

Below are two overly simplified examples of charges, payments, and their effect on the 1098T. The examples are for a typical North Central College undergraduate who completes their degree in 4 years and resides on campus for the first two years. Please note that amounts and dates shown are for demonstration purposes only.
 

Example 1: Spring charges paid in December

In this example, payments for Spring were paid in December of each year (charges and payments in the same tax year). During the first two years of 1098T statements, Box 1 is less than the total payments received because a portion of the payments were allocated to housing and meals. For the Junior and Senior Year, payments and QTRE match, so Box 1 shows the total payments made. This student receives a 1098T for the year they graduate since they were enrolled for the Spring term, but there were no payments in that final tax year.

Example 2: Spring charges paid in January

In this example, payments for Spring were made in January (Spring charges and payments in different tax years). Initially, the QTRE available for each tax year is higher than payments, so Box 1 shows total payments. However, over time, the QTRE is exhausted. This student receives a 1098T for the year they graduate since they were enrolled for the Spring term. However, Box 1 maybe significantly less than the payments received that year. In some cases, Box 1 may be $0 for the final year.

The above examples are intended to demonstrate how the timing of the payments can impact Box 1 of the 1098T.  If North Central College receives your Spring payment in December some years and in January other years, or if you use a payment plan where a portion of the Spring charges are paid In December and the remainder in the next tax year, your results will be different. But the basic premise that Box 1 cannot exceed QTRE available for a given tax year remains the same.

Please note that the official 1098T form provides the basic information that North Central College is required to share with the IRS. However, the Student Finance section on Merlin/Self-Service provides students with supplemental information, which may include:

• Detail of Payments Received
• Detail of Adjustments to Prior Payments
• Detail of Charges Billed
• Detail of Adjustments to Prior Charges
• Detail of Scholarships or Grants
• Detail of Adjustments to Prior Scholarships or Grants
• Box 1 Payments Reportable

You can use this supplemental information to verify the calculations for the 1098T.